Home Insurance Process for a Purchase

Now that you’ve gotten pre-qualified for a mortgage and have a house under contract, what’s next for insurance?
Getting your insurance in place for closing is important and should not be put off until the last minute. Putting it off is likely to cost you money and could potentially postpone or terminate your closing.
Here is the typical timeline and process you will experience with our agency.

The process can go much faster than this if your situation is simple and you have the time to go through it all at once. If your house is newer, it’s generally quicker since you’re not having to wait on home inspection documents, etc. If your house is over 30 years old, the process often takes a bit longer as inspections need to be reviewed before completing the application process. However, the process from beginning to end typically can be done in 2-5 days without much of a rush if you have all the information necessary (inspections, etc) and are ready to make a decision when you start.
Want more details, read below for our in depth explanation of the 8 step process.

Step 1 – CONTRACT – Contact on property accepted by Seller. 15 day look period begins.

Step 2 – BEGIN QUOTE PROCESS – Call our agency to begin the home quote/proposal process. Plan to spend 15-20 minutes answering questions about your situation so we can accurately complete your estimates and advise you on what you may need to do next. For example, we will discuss which kind of home inspections you may want to purchase and if there is anything specific you may want to look for next time you go to the house. Based on the information you know (or after we get your inspections if needed) we can advise you on what issues you may need to consider asking the seller to fix. For example, many insurance carrier will require a water heater to be replaced if it is over 20 years old. Often, you can negotiate that into the deal if you ask early enough.

Step 3 – RECEIVE ESTIMATES – It generally takes 24-48 hours * for us to set up and compare the details of several different insurance companies options for your house. We will then email you the details of our findings and some information about your options.

*why does it take so long? why cant you just give me a quote over the phone when I call?- accurately setting up and reviewing multiple choices takes time and requires attention to detail. This insurance will be protecting what is likely your biggest single asset. It’s important; so we take the appropriate time to ensure accuracy and completeness. That’s not saying we never make mistakes, we’re people too. But we’ve found this process significantly reduces the chance for error and headache later.

Step 4 – DISCUSS YOUR OPTIONS – This is usually a 20-30 minute phone call or appointment. We will take the time with you to review the different companies we’re suggesting as well as the differences between the companies and their rates. This part usually only takes a few minutes. The bulk of our time is generally spent on talking about the optional coverages and limitations. See our page on “Homeowners Insurance Endorsements, Limitations, and Exclusions” for more details on the optional coverages.

Step 5 – COMPLETING YOUR APPLICATION – Once you’ve decided on the company and coverages which best fit your needs, all that’s left is to answer any remaining application questions and sign your paperwork. There are often additional questions required to complete your application that are not ‘required’ as part of the quoting process**. This is usually the last step in the process where you will need to be involved.

**Our home insurance ‘quoting’ process is different than most. The major differences are 1) the information we gather at the beginning of the process and 2) how we present our options to make sure we discuss the most important limitations, exclusions and optional coverages. See “how our process is different” page for more details

Step 6 – INSURANCE INFORMATION TO LENDER – Once your application is completed, your agent will communicate with your lender about a closing date and details they may need on the document we will send to them (proof of insurance and an invoice/receipt). If you’re getting a mortgage, the lender nearly always requires the insurance premium payment to be ‘escrowed’ and the initial annual payment will be paid to the insurance company directly out of your closing funds. You generally won’t need to make a payment directly for your insurance (that premium payment will be included in your closing costs).

Step 7 – UNDERWRITING – So you’ve closed on your house and bound your insurance application with your agent. All done…almost. You may not have to do anything else, but there is quite a bit of work still to be done. This is where the insurance company will review your information and either issue you a policy, or issue a cancellation or require action in order to issue you a policy.

Step 8 – APPROVAL/DECLINATION – With a mortgage, once you go to closing, that’s it. All the underwriting has been done up front and at that point everyone is on the hook. With the property insurance, when you get to closing all you’ve done is submit an APPLICATION for a policy to an insurance company. The AGENT/AGENCY has the authority to BIND the coverage temporarily so you can close. However it’s up to the insurance company (carrier your policy is actually written by) to then review and actually issue you a policy. This is when they actually START the underwriting of your application. They will then begin to review the information on the application, your documentation (inspections, etc), and often an exterior inspection they will order of the property AFTER closing. The insurance company then has 120 days to review your documents and situation and anytime during that period may either ask for additional documentation or can actually require you to make repairs to your property. They can even cancel your policy with 20 days notice if there is something about your situation which does not meet their underwriting guidelines. Call us or see our page on “Most Common Homeowners Insurance Issues After Closing” for more details and examples.